France’s Finance Act for 2026, adopted by Parliament on 2 February 2026, introduces a new tax specifically targeting certain patrimonial holding companies used to hold non-operational assets, including certain personal or non-business assets.
The tax will apply for the first time to taxable assets held by a patrimonial holding company as of the closing date of its first fiscal year ending on or after the date of the measure’s entry into force.
The new tax marks a significant change, as French patrimonial holding companies were previously not subject to any standalone wealth-type tax at the corporate level.
The tax applies to companies subject to French corporate income tax, as well as to foreign companies subject to an equivalent tax, provided that, in the case of foreign companies, they are ultimately controlled by at least one individual who is a tax resident in France.
The new tax applies if, on the closing date of the fiscal year, all the following cumulative conditions are met:
The tax base is deliberately limited to non-operational assets and focuses on assets that are not strictly required for an economic activity. The taxable assets are limited to the following categories:
The tax is levied at an annual flat rate of 2%, applied to the fair market value of the taxable assets.
Given its annual nature and the fact that it applies to asset values rather than income, the tax may represent a significant recurring cost over time when non-operational assets are retained within holding structures.
In the case of foreign holding companies, the tax is payable by the French tax resident individuals who control them, subject to an anti-avoidance safeguard clause. For French holding companies, the tax is payable by the company itself.
From a legal perspective, assets subject to this new tax are exempt from French real estate wealth tax (IFI) as of 1 January 2027.
With this new tax, the French legislature clearly targets the use of holding structures to own high-value personal or non-operational assets. Potentially affected groups and individuals should now anticipate the impact of this new regime, review the nature and use of assets held within holding companies, and assess possible restructuring options by 31 December 2026 for companies with a calendar fiscal year, or otherwise before the closing date of the first fiscal year that falls within the scope of the tax.
Given the complexity of the new regime, the comments above are provided for illustrative purposes only and constitute a summary overview of the applicable rules.
For more information on how the new tax may impact you, please consult your regular BDO contact or the author of this article.
Cyril Klajer
Mallaurie Mason
BDO in France
The tax will apply for the first time to taxable assets held by a patrimonial holding company as of the closing date of its first fiscal year ending on or after the date of the measure’s entry into force.
The new tax marks a significant change, as French patrimonial holding companies were previously not subject to any standalone wealth-type tax at the corporate level.
The tax applies to companies subject to French corporate income tax, as well as to foreign companies subject to an equivalent tax, provided that, in the case of foreign companies, they are ultimately controlled by at least one individual who is a tax resident in France.
The new tax applies if, on the closing date of the fiscal year, all the following cumulative conditions are met:
- The company holds assets with a fair market value of at least EUR 5 million;
- The company is controlled, directly or indirectly, by one or more individuals holding at least 50% of the voting rights or financial rights, or exercising effective decision-making power;
- More than 50% of the company’s income qualifies as passive income (dividends, interest, and rental income).
The tax base is deliberately limited to non-operational assets and focuses on assets that are not strictly required for an economic activity. The taxable assets are limited to the following categories:
- Residential real estate made available to controlling individuals, whether free of charge or at a rent below market value
- Vehicles not used exclusively for business purposes, as well as yachts and aircraft
- Jewellery, precious metals, and fine wines and spirits
- Race or competition horses
- Assets used for hunting or fishing activities
The tax is levied at an annual flat rate of 2%, applied to the fair market value of the taxable assets.
Given its annual nature and the fact that it applies to asset values rather than income, the tax may represent a significant recurring cost over time when non-operational assets are retained within holding structures.
In the case of foreign holding companies, the tax is payable by the French tax resident individuals who control them, subject to an anti-avoidance safeguard clause. For French holding companies, the tax is payable by the company itself.
From a legal perspective, assets subject to this new tax are exempt from French real estate wealth tax (IFI) as of 1 January 2027.
With this new tax, the French legislature clearly targets the use of holding structures to own high-value personal or non-operational assets. Potentially affected groups and individuals should now anticipate the impact of this new regime, review the nature and use of assets held within holding companies, and assess possible restructuring options by 31 December 2026 for companies with a calendar fiscal year, or otherwise before the closing date of the first fiscal year that falls within the scope of the tax.
Given the complexity of the new regime, the comments above are provided for illustrative purposes only and constitute a summary overview of the applicable rules.
For more information on how the new tax may impact you, please consult your regular BDO contact or the author of this article.
Cyril Klajer
Mallaurie Mason
BDO in France